From Irgun to
AIPAC: Israel Lobby’s US Treasury Follies Hurt

By Grant F.
Smith

17/09/08 "Dissident Voice"
-- - September 16th, 2008 -- According to the
Jerusalem Post, the US Department of Treasury’s new
Terrorism and Financial Intelligence (TFI) unit
is going after the Islamic Republic of Iran Shipping Lines.
TFI targeted the company and 18 affiliates for their alleged
effort to "facilitate the transport of cargo for UN
Designated proliferators.” TFI further charges it “falsifies
documents and uses deceptive schemes to shroud its
involvement in illicit commerce.” Later in the same article,
the American Israel Public Affairs Committee (AIPAC)
trumpets this as yet another victory in its drive to
confront the Islamic Republic of Iran: “AIPAC strongly
supports these steps which are part of a coordinated effort
by the United States and the international community to
ratchet up the pressure on Iran and convince it to suspend
its illicit nuclear activities. These steps send an
important signal that America continues to lead the effort
to confront and stop Iran’s nuclear pursuit.” But is America
actually in the driver’s seat of this destabilizing
brinksmanship? History suggests that it is not.

AIPAC and its associated think
tank, the Washington Institute for Near East Policy (WINEP),
were instrumental in
lobbying the president for the creation of the Office of
Terrorism and Financial Intelligence unit early in 2004. The
Israel lobby also vetted
Stuart Levey who President Bush approved to lead the new
unit.
TFI claims to be “safeguarding the financial system
against illicit use and combating rogue nations, terrorist
facilitators, weapons of mass destruction (WMD)
proliferators, money launderers, drug kingpins, and other
national security threats.” However its actions—and more
important, inactions—reveal it to be a sharp-edged tool
forged principally to serve the Israel lobby.

TFI has taken no actions to
undercut one nexus of money laundering in the Middle East
unveiled in 2005 by Israeli prosecutor Talia Sasson and
exposed by USA Today. Even mainstream print outlets such as
Reuters continue to
wonder aloud why US tax exemptions are offered for
illegal overseas
activities. Although Stuart Levey has made
multiple official visits to Jerusalem to liaise with
Israeli government officials, when formally asked under a
Freedom of Information Act request to reveal how TFI was
tackling the reported $50-$60 billion laundered from the US
through Israel and into illegal West Bank settlements,
TFI
politely demurred. (PDF) TFI claims that Levey’s
US-taxpayer-funded missions to Israel must be kept secret
from the American public in order to comply with the
Bank
Secrecy Act, which ironically is an
anti-money-laundering law.1
This is not to say that TFI is a black box to everyone.
Invited guests and members of WINEP have received many
intimate briefings from TFI officials and
consultants—possibly more than the entire US Congress.

TFI’s highly selective,
largely secret pursuits should surprise no one. This is not
the first time Israel lobbyists have bent an agency toward
counterproductive foreign policy initiatives with the
approval of a sitting president. During WWII, Treasury
Secretary Henry Morgenthau Jr. became infatuated with the
efforts of Peter H. Bergson (aka Hillel Kook, born in
Lithuania, 1915-2001) toward the formation of a “Jewish
Army” in the Middle East. Bergson’s “Committee for a Jewish
Army” circulated an early plan to the US Congress calling
for financing an army of 100,000 Jews in Palestine to fight
Nazis and “fifth columnists” of Syria, Iraq, and Egypt. In
reality, Bergson was leading an American front organization
for Menachem Begin’s Irgun Z’vai Leumi organization. Irgun
also lobbied Nazi Germany for a Jewish Army, as well as a
formal alliance between 1940 and 1941 while Hitler appeared
to have the upper hand in Europe.2

Morgenthau strongly
identified with Bergson’s later rescue efforts to save Jews
from Nazi barbarity by finding refugee havens in Western
host countries. Morgenthau sought to remove displaced person
policy from the jurisdiction of the US State Department by
commissioning his own department assistants, Josiah Dubois,
John Pehle, and Randolph Paul, to compile a report on rescue
opportunities and failures, which he presented to President
Roosevelt on January 16, 1944. It roundly castigated the
State Department and recommended that Roosevelt “remove the
hands of men who are indifferent, callous and perhaps even
hostile.” He also threatened to launch a public relations
attack on the State Department as a bastion of
anti-Semitism. It was a charge, he said, that “will require
little more in the way of proof for this suspicion to
explode into a nasty scandal.”3

Roosevelt, not wishing to
face such a scandal in an election year, issued Executive
Order 9417 establishing the War Refugee Board (WRB). He
named Morgenthau, Secretary of State Cordell Hull, and War
Secretary Henry Stimson to head the board. John W. Pehle,
who as assistant treasury secretary had spent much of his
time working to produce evidence of State Department
procrastination on refugee efforts, became director of the
WRB. Josiah Dubois affirmed that the work of Bergson was
effective in “generating an atmosphere conducive to its
formation…we were seeking the same goals.” Earlier, Pehl had
ordered that Bergson be allowed to utilize State Department
cables to communicate with Irgun leader Vladimir Jabotinsky
and facilitate his movements to Turkey.4
The WRB was authorized to establish refugee absorption
centers in neutral countries, a worthy effort that was
unable to lead by example. By late July of 1944, the WRB was
only able to secure infrastructure for 1,000 refugees at
Fort Ontario in Lake Oswego, New York. This number was
unimpressive to other countries being lobbied to absorb
refugees, and the entire effort was largely a failure. But
it was more than just a failure to rescue innocent victims
of the Holocaust or a diversion of wartime assets—with no
referendum on the matter or act of Congress, Morgenthau had
allied a key US government agency to terrorists.

Before Bergson began
receiving support from Treasury, Irgun had plenty of blood
on its hands. Vladimir Jabotinsky was a major figure in the
World Zionist Organization and put together a force of 5,000
soldiers as the organization’s contribution to the British
conquest of Palestine during WWI. In 1920, he organized the
Haganah, the precursor to the Israeli Army, and held a
position in the WZO World Executive for his leadership role.
The Haganah worked jointly with the British to quell the
uprising as their “settlement police.” He resigned to build
his own far-right-wing Zionist-Revisionist World Union in
1925, which opposed World Zionist Organization president
Chaim Weizmann’s vision. Jabotinsky’s was to “revise” the
British decision to separate Trans-Jordan from territory
allotted to become the “Jewish National Home” after WWI in
the Balfour declaration. Jabotinsky also wanted to “revise”
the British decision to disband the Jewish legion. His views
evolved over time toward supporting the absolute necessity
of violent armed displacement of Arabs in Palestine. This
was frankly encapsulated in his 1923 “Iron Wall” manifesto:

There can be no kind of
discussion of a voluntary reconciliation between us and
the Arabs…Any native people…view their country as their
national home. They will not voluntarily allow, not only
a new master, but even a new partner…Colonization can
have only one goal. For the Palestinian Arabs this goal
is inadmissible. This is in the nature of things. To
change that nature is impossible…colonization can
therefore, continue and develop only under the
protection of a force independent of the local
population—an iron wall which the native population
cannot break through. This is, in toto, our policy
toward the Arabs. To formulate it any other way would
only be hypocrisy.

Jabotinsky established his
paramilitary Betar youth group in 1923 in Palestine and
other countries. Menachem Begin joined in 1929 in Poland,
rising to head the national unit that became Betar’s largest
branch.

Arab Palestinians, sensing
their own eventual displacement, had begun revolting against
Jewish immigration in 1936. A Revisionist paramilitary split
from the Haganah in 1931 and was placed under the command of
Jabotinsky in December of 1936. Although they were
originally committed to “self restraint,” by November the
Irgun forces were actively engaging in terrorism, including
the use of milk-can bombs that would be famously deployed a
decade later against the British in the
King David Hotel attack. Early in September of 1936, 13
Arabs were killed, supposedly in retaliation for the death
of three Jews. Several Irgunists were determined to act on
their own, but the Irgun Command headed them off by
organizing a wave of operations, beginning on November 14,
that resulted in 10 dead and numerous wounded. The Irgun’s
campaign of attacks on purely civilian targets reached its
high point in the summer of 1938. On July 6, a bomb in a
milk can went off in the Arab market in Haifa, leaving 21
dead and 52 injured. On July 15, an electric mine in David
Street in the old city of Jerusalem killed 10 and wounded
30. On July 25, another bomb in the Haifa market left 35
dead and 70 wounded. On July 26, a bomb in Jaffa’s market
killed 24 and injured 35.5
Historian
Paul Johnson claims that Israel owes its existence
largely due to the timely deployment of such terrorist
attacks.6
Still, in these days long predating the so-called “war on
terror,” the architect of many of these bloodbaths had no
problem entering the US.

In America, Irgun leader
Jabotinsky roamed freely for a short time. On August 2,
1940, he was examined by a doctor who suspected that he had
heart trouble. Jabotinsky then made his way to a
Betar camp
in Greene County in the Catskill Mountains, 130 miles from
New York. After reviewing an honor guard, he collapsed and
died. Although Irgun has long since left the building,
AIPAC’s men may now kill off the remaining international
credibility of an already severely debilitated US Treasury
Department.

Treasury gasped this week as
it bailed out Fannie Mae and Freddie Mac to the tune of
billions in committed taxpayer funds.
International financial institutions holding
US-mortgage-backed and Treasury securities forced the
Treasury to intervene in order to avert a global financial
catastrophe. Such sovereign economic interests are now
returning to the forefront of international relations and
displacing blind acquiescence to preemptive bellicosity.
Looking back, it is painfully obvious that the United States
should have accepted the comprehensive “Grand
Bargain” tendered by Iranian moderates in 2003. Iran’s
$753-billion-dollar economy would be a highly productive
trading partner for the United States—Iran’s competitive
advantages in energy are well matched with the US’s
high-tech, engineering service and machinery exports.
Instead, we have AIPAC continually disrupting trade flows
against the broader American interest.

AIPAC has a history of
directing US trade policy against the interests of American
producers and workers. In 1984, the
FBI found AIPAC in possession of purloined secret
International Trade Commission documents that US government
officials solicited from private industry in order to
negotiate a favorable bilateral free trade agreement with
Israel. AIPAC promptly used this stolen information against
the American worker—the subsequent FTA has yielded a $63
billion net
US trade deficit with Israel between 1989 and 2007.

The grinding march toward a
pointless war with Iran, like Morgenthau’s dalliances with
the Irgun, is not really about America’s own best interests.
It’s not that Stuart Levey doesn’t know how Israeli
extremism can endanger the United States. Levey’s
Fulbright-grant-funded undergraduate thesis was all
about Meir Kahane, the Brooklyn-born rabbi who founded the
Israeli group Kach. Kahane Chai (Kach) currently occupies
slot number 20 on the State Department’s list of
terrorist organizations. While the buttoned-down Levey
is certainly not an extremist of Kahane’s or Jabotinsky’s
violent mold, his AIPAC-sponsored financial warfare is
clearly extreme. Levey and his supporters are threatening US
trading partners, banks, multinational corporations,
independent shippers, small trade related businesses and the
international shipping system. The only beneficiary of the
action is Israel—a non-signatory to the Nuclear
Non-Proliferation Treaty (NPT) and longtime owner of its own
nuclear weapons—an arsenal financed and created, in large
part, by precisely the kinds of “deceptive schemes” and
“illicit commerce” toward which TFI consciously turns a
blind eye. In contrast, Iran signed the NPT, is under active
International Atomic Energy Agency monitoring, and is not
enriching uranium to levels sufficient for nuclear weapons
production.

Like the rigged 1984 Free
Trade Agreement, AIPAC’s Treasury Department actions will
create more hard times for American workers. As never
before, America’s economy could benefit from any expansion
in export jobs boosted by new market access. Trade with Iran
and the rest of the Middle East is based on real
comparative advantages. US workers, many facing
home foreclosures due to
junk mortgages, will be the unknowing victims of the
latest US Treasury gambit. Like the Morgenthau scheme, the
Israel lobby’s latest venture is likely to fail as the
international system routes around the new trade
impediments. The world largely ignored Morgenthau’s and the
men from Irgun’s attempts to “lead by example” to save
displaced persons of Europe. Levey’s far less worthy cause,
fighting for Israeli regional nuclear hegemony through
damaging trade edicts, may also be similarly ignored.
Countries suffering from the fallout of their investments in
US junk mortgages are unlikely to buy into more
junk policies
and
junk wars crafted by the Israel lobby.

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